This is the debate which the Financial Times says has been prompted by Mark Carney’s intervention on climate change earlier in the week. His point seemed rather incisive to me, observing that “Since the 1980s the number of registered weather-related loss events has tripled” and that furthermore “Inflation-adjusted insurance losses from these events have increased from an annual average of around $10bn in the 1980s to around $50bn over the past decade”. Given the climatological evidence suggests that “challenges currently posed by climate change pale in significance compared with what might come”, it’s a systemic issue for insurance which needs to be addressed. His concern stems from what he terms the tragedy of the horizon:
We don’t need an army of actuaries to tell us that the catastrophic impacts of climate change will be felt beyond the traditional horizons of most actors – imposing a cost on future generations that the current generation has no direct incentive to fix.That means beyond:
- the business cycle; 9
- the political cycle; and
- the horizon of technocratic authorities, like central banks, who are bound by their mandates.The horizon for monetary policy extends out to 2-3 years. For financial stability it is a bit longer, but typically only to the outer boundaries of the credit cycle – about a decade. 10In other words, once climate change becomes a defining issue for financial stability, it may already be too late.
As someone who is instinctively and reflectively hostile to technocrats, this strikes me as one of the strongest arguments it is possible to point to for the value of such figures. Their appointment frees them from narrowly political concerns, facilitating interventions which would be constrained by, among other things, the temporal horizons of other actors. This ‘freeing’ is both narrow and shallow. It is also a profoundly political act in its own right, representing a crucial strategy for placing increasing portions of economic questions beyond political scrutiny. But an adequate sociology of technocrats should recognize that insulating policy from politics will tend, all other things being equal, to grant a degree of freedom to the policy maker which is lacking for the politician (though indeed many other constraints may follow from the institutional arrangements in which the technocrat is embedded).
I find the reaction to Carney’s speech curious because I find his intervention itself so plausible. But some have argued that this ‘over-reach’ risks politicizing his role in a way that would lead appointees to be made on the basis of political criteria in future. The interesting question becomes whether such criteria might be applied to other technocrats whose role within contemporary Europe I find much less persuasive. Can we see a nascent elite cultural reaction against the encroachment of technocracy in Europe over recent years? Or is ‘over-reach’ simply what technocrats do when one disagrees with the views they are espousing?